Loading...
HomeMy WebLinkAbout12-09-2002 City Council/RDA Study SessionMINUTES CITY COUNCIL /REDEVELOPMENT AGENCY STUDY SESSION CITY OF LAKE ELSINORE 183 NORTH MAIN STREET LAKE ELSINORE, CALIFORNIA MONDAY, DECEMBER 9, 2002 CALL TO ORDER Chairwoman Brinley called the Study Session to order at 4:04 p.m. ROLL CALL PRESENT: COUNCILMEMBERS: BRINLEY, BUCKLEY, SCHIFFNER, ABSENT: COUNCILMEMBERS: KELLEY, HICKMAN Also present were: City Manager Watenpaugh, Assistant City Manager Best, City Attorney Leibold, Administrative Services Director Boone, Community Development Director Brady, Information/ Communications Manager Dennis, and Deputy City Clerk Paredes. DISCUSSION Disposition and Development Agreement by and among the Redevelopment Agency of the City of Lake Elsinore and Laing -CP Lake Elsinore LLC and Civic Partners - Elsinore LLC. (F:134.7) X:68.1 Executive Director Watenpaugh introduced the item. Legal Counsel Leibold commented that the City had been in negotiations for quite some time with the Developer and Master Developer in respect to the Disposition and Development Agreement (DDA). She indicated that the Redevelopment Agency Board and the City Council discussed the DDA as it related to the settlement of pending litigation. She explained hat the purpose of the Study Session was to provide an opportunity for questions PAGE TWO — STUDY SESSION - DECEMBER 9, 2002 and comments from the Redevelopment Agency Board to staff in order to allow staff to prepare the answers for the City Council/Redevelopment Agency Meeting the following day. She further explained that the DDA was an agreement between the Redevelopment Agency, the Developer, Laing -CP Lake Elsinore LLC, and the Master Developer, Civic Partners- Elsinore LLC. She indicated that the City was not a party to the agreement. She further explained that the agreement related exclusively to the underlying financing mechanism for the eventual development of the Back Basin. She noted the location of the property being discussed on an exhibit outlining the Eastlake Specific Plan area and noted that land usewas governed by the East Lake Specific Plan. Legal Counsel Leibold indicated that the DDA between the Redevelopment Agency, the Developer and Master Developer did nothing to change the underlying land use designation of the property. She explained that the DDA provided for the conveyance of certain Agency property, which was 89.08 acres of property to the Developer for a purchase price of $4,000,000 and an option on the Stadium's Gravel Parking Lot consisting of 14.76 acres, and the Lehr Option piece consisting of 609 acres, which was referred to in the Agreement as "Developer Property ". She explained that the property had many impediments to development and private enterprise acting alone would not develop the property. She noted that previous Council members had entered into Agreements to stimulate development in the Back Basin and the proposed Agreement if approved would replace and supersede all prior Agreements. She further explained that in exchange for the developer reclaiming the property and bringing it up to a developable level, it would be entitled to property tax generated to help off -set the extraordinary costs of developing the property. She noted the issue that arose from the last Closed Session related to the relationship between the Developer and Master Developer and what would happen in the event of a default. She indicated that what the Redevelopment Agency had bargained for was steady progress of development in the Back Basin. She explained that for purposes of development it would mean developable pads to allow development to become available. She indicated that the Land Use Designation which would affect actual building and the designation of the various uses was a function of the City, since the Redevelopment Agency did not possess Land Use Regulatory authority. PAGE THREE — STUDY SESSION — DECEMBER 9, 2002 Legal Counsel Leibold noted :that the Developer and Master Developer recognized that once they had the assurance of the financing mechanism provided by the DDA, that they had a long haul in the due diligence period to secure the Army Corp of Engineers' approval to provide for a 404 permit, as well as City entitlements including amendments to the Specific Plan. She indicated that it would be through an amendment of the Specific Plan that the City would have an opportunity to evaluate the allocation of land use, density, development standards, etc., which would be an open and public process to both the Planning Commission and City Council. She stressed that the DDA did not address the aforementioned issues. She explained that the Redevelopment Agency's obligation to pay the Developer and Master Developer any increment at all, was subordinate to the Redevelopment Agency's first priority obligations, which assured that before any increment could be passed on to the Developer or Master Developer, the Redevelopment Agency had to satisfy all of its existing debt service on outstanding bonds; pass- through agreements; housing set -aside obligations and a variety of other maintenance operating costs and other obligations pursuant to outstanding agreements. Chairwoman Brinley opened the Meeting for public questions. Steve Symington, Civic Partners, Master Developer, introduced himself. Steve Cable, California Region President, for John Laing Homes introduced himself. B Peter Dawson, 18010 Grand Ave., commented that he was opposed to permanent development in the Back Basin. He commented that he felt that the land should be used for recreation since it was subject to flooding. He noted that area was flooded during the floods of 1980. He commented that the Outflow Channel would not provide enough relief to prevent flooding in the Back Basin and ultimately the Back Basin would flood again. He indicated that the problem had been placed in the lap of the present City Council by a prior City Council and he felt that the present City Council was going to place the problem in the lap of the future City Councils who would answer to the people. PAGE FOUR STUDY SESSION — DECEMBER 9, 2002: Ken Howard 17540. Grand Avenue, questioned the relationship between the proposed development and the airport. Executive Director Watenpaugh explained the Agreement would require a new Specific Plan that would identify the type of development to take place and where it would occur. He noted that the City had made it very clear to the Developer and Master Developer that the Airport would remain intact. He noted that the property owner of the airport could do something different; however the City would not change the airport usage: Mr. Howard questioned the effectiveness of the Outflow Channel, since it could not carry water until the level reached 1259' and: flood elevation was at 1262'. He questioned what impact it would have on the Habitat in the Back Basin. Executive Director Watenpaugh explained that the Wildlife Habitat would remain intact and explained that it was part of the mitigation for the Levee and Outlet Channel. He noted that it would probably be expanded to mitigate for flood plain. He addressed the flood elevation and explained that when the flood elevation reached 1262' the water would enter the Back Basin and no structure would be built below 1265', which was the two foot plus elevation` level set by the Federal Emergency Management Agency. He further explained that any development that occurred in the Back Basin would be required to maintain 30;000 + acre feet of water storage and the outflow channel was designed to take water out at 1255'. Chris Hyland, 15181 Wavecrest, indicated that on Page 56 of the DDA, under the 404 Permit, it indicated that the City would be obtaining the 404 Permit. She asked for clarification. Executive Director Watenpaugh stated that the City would be the permitee on the 404 Permit. Legal Counsel Leibold stated'that the City had always been the permitee on the 404 Permit and the only way ,that the Developer would have the rights to process the permit through the Army Corp of Engineers was for the City to delegate or assign all of its permitee rights to the Developer, however the City had elected not to do so. She indicated that PAGE FIVE — STUDY SESSION— DECEMBER 9, 2002 the City and the Developer would work together and the cost of the permit would be borne by the Developer as a cost of the development. She noted that the cost of the 404 Permit was included as part of the extraordinary cost for which the Developer would be entitled to reimbursement, assuming there was available increment. Mr. Howard wanted to know who was going to pay for all the extraordinary costs. Legal Counsel Leibold stated that the property owners would pay property taxes and explained that there was no difference in the amount that the property owner would pay, however the property taxes were allocated differently due to the establishment of the Redevelopment Project Areas, years ago. She further explained that the sole source of reimbursement for the extraordinary infrastructure associated with the Development or the property would be located within the East Lake Specific Plan. Linda Ridenour, 33628 Brand Ave., clarified the reimbursement process. Boardmember Schiffner stated that the reimbursement would occur from the increase in revenues generated from the project. Ms. Ridenour asked how many years the Developer would be eligible: to receive tax money. Chairwoman Brinley questioned the generation process and clarified that the Redevelopment Agencywould meet the senior liens firstr. Legal Counsel Leibold stated that the reimbursement of the debt for extraordinary costs would occur only after the other primary obligations of the Redevelopment Agency were met, and then, only after the Agency met the other debts, would a reimbursement be made. Chairwoman Brinley clarified that the development would generate money for the Redevelopment Agency, however the primary debts would be met and then, whatever was left would be reimbursed to the Developer for the infrastructure. Legal Counsel Leibold confirmed and explained that a Redevelopment Agency was based on debt and did not receive any tax increment except to cover its debt; therefore the work of a Redevelopment Agency revolved around debt. She indicated that the Redevelopment Agency had preexisting obligations that predated the proposed Agreement and included some outstanding bonds, Pass - Through Agreements, Agreements, the stadium and the obligation of the 20% housing set -aside and these obligations must be paid first. She PAGE SIX — STUDY SESSION - DECEMBER 9, 2002 indicated that by the Agreement, the Agency agreed to take all of the increment and pay its priority obligations first, and if the Agency otherwise didn't have enough money to meet its first priority obligations, the Agency then took the increment generated from the Developers property to meet the first priority obligations. She noted that the Developer and Master Developer would be entitled to increment only if the Redevelopment Agency met all other obligations. She commented that the $76,000,000 was not a one time lump sum to be paid, but rather like a mortgage that would be paid over time. Ruth Atkins stated that she was not in favor of housing.in the Back Basin and noted the amount of rain that occurred in. 1870 and other incidents that occurred in the City. She questioned affordable housing in the area and noted the problems with comparables. Chairwoman Brinley asked that the Affordable Housing issue and Flooding be addressed by Legal Counsel Leibold. - Legal Counsel Leibold indicated that as a matter of law, property developed within the boundaries of a Redevelopment Area carried certain requirements. She explained that one of the requirements was that in the aggregate a certain percentage of all new or reconstructed housing in any Redevelopment Project Area had to be made available for low and moderate households for Affordable Housing. She noted that the proposed agreement simply acknowledged that the property in the project was located within a Redevelopment Project Area and, as such, was subject to the Affordable Housing requirements. She noted that the Developer accepted the obligation to assure the Redevelopment Agency that the inclusionary housing obligations were satisfied. She explained that when houses were built in a Redevelopment Project Area, and if and when housing was built in the proposed area, 15% of the gross amounts of housing units had to be affordable; She noted that they could be located within the boundaries of the East Lake Specific Plan; located in other areas of the Agency's Redevelopment Project Areas; or anywhere within the City boundaries. She further noted that the Agreement simply imposed a financial obligation on the Developer and the Master Developer to assure the Redevelopment Agency that the Affordable Housing obligations were satisfied to prevent the PAGE SEVEN - STUDY SESSION — DECEMBER 9, 2002 Agency from being left with a deficit under the "existing legal requirements. She addressed the issue of comparables and explained that there were a variety of terms and conditions that set the format. She noted that the way the documents were structured addressed the issue so that the affect would not be a lowering of neighboring properties. She indicated that to qualify for Affordable Housing, for purposes of meeting the requirements stated in the law, there would be covenants recorded against the property that run with the land, requiring that the housing remain affordable, therefore it would not be an equal comparable. Ms. Atkins asked what would be considered affordable. Legal Counsel Leibold stated that there were three income groups that would have to be provided for, and a formula was available to figure the income that would qualify for each group. Executive Director Watenpaugh addressed the flood issues and stated that the Flood Elevation was set by FEMA and not by the local jurisdiction. He indicated that there were a number of areas of the City that fell within the Flood Zone and that was dictated by FEMA. He noted that no construction could be done without their authorization. Mrs. Ridenour questioned if FEMA took into consideration that when construction occurred it used up the land that would originally absorb water. Executive Director Watenpaugh explained that FEMA had a formula that dictated construction and addressed the calculations for run -off. Ms. Ridenour questioned the responsibility of the 404 Permit. Executive Director Watenpaugh noted that since FEMA set the standards they were the ones that would answer for any flooding. Ms. Ridenour questioned the lawsuit and asked if the DDA would stop the lawsuit. Chairwoman Brinley stated that it would bring the lawsuit to an end; and it provided the City with a better project. Boardmember Schiffner stated that regardless of the lawsuit, the City had an existing DDA which would allow 9;000 houses and stay in effect for the next 15 years. He noted that the new DDA would eliminate the existing DDA and at the same time answered the concerns of Council. Chairwoman Brinley noted that it gave the City a performance clause and a phasing period. PAGE EIGHT'`- STUDYSESSION DECEMBER 9, 2002 Pete Dawson questioned Blight and asked what allowed the City to create a Redevelopment Area in the Back Basin. Legal Counsel Leibold presented an overview of the laws that were in effect at the time the Project Areas were created. Ken Howard asked what happened to the water in the Back Basin when it flooded. Executive Director Watenpaugh presented an overview of the process that would be followed Mr. Semingson, Civic Partners, commented that the premise that kept his company working with the community and the Redevelopment Agency was that without the development of the Back Basin there would be no increment created and nothing to go towards the existing debt of the Redevelopment Agency. He further commented that the funds generated through the development could be used for public purposes. Mr. Cable, Laing Development, presented an overview of the development that his company has been involved in. He noted the site of possible development and explained that it would include a golf course. He clarified that without community input, it would be impossible to proceed with the project, and noted the rigorous process required to obtain a 404 Permit. Boardmember Buckley asked to have a 404 Permit defined. Executive Director Watenpaugh stated that the 404 Permit was a sign-off by the Army Corp of Engineers after the applicant received authorization from all other agencies, such as Fish and Game; Fish and Wildlife; Riverside County Flood Control; the MSHCP, etc. Boardmember Buckley clarified that the City would be obtaining the 404 Permit on behalf of the Developer. Executive Director Watenpaugh explained that the City had always been the lead agency and would continue to do so. He noted that the funding and resources would come from the developer. Boardmember Buckley asked if SAWPA was aware of the DDA. Legal Counsel Leibold stated that the City and SAWPA were the existing permitees. Executive Director Watenpaugh stated that SAWPA was aware of the Back Basin plans. Boardmember Buckley asked if the Watershed Authority was aware of plans for development. Legal Counsel Leibold stated that the wish list generated by PAGE NINE — STUDY SESSION - DECEMBER 9, 2002 LESJWA, included many of the projects or portions of the extraordinary infrastructure improvements that the project would entail. She explained that it recognized that in the event that the Developer moved ahead of the LESJWA schedule, and LESJWA had otherwise approved funding of the project, that the funding could be reimbursed through LESJWA. She noted that it was not an obligation, but rather recognition that there could be an overlap of the extraordinary infrastructure requirements associated with the development and the existing project list generated by LESTWA. Executive Director Watenpaugh noted that when the $15,000,000 was approved, it was accomplished through the efforts of the Developer in the Back Basin, who put up the money for the lobbying efforts. Boardmember Buckley questioned the obligations. Legal Counsel Leibold clarified the obligations that would be required. Boardmember Buckley presented an overview of a possible formula of Low to Moderate Income Housing. He asked how much had actually been spent on Low Income Housing. Executive Director Watenpaugh stated that no money had been spent on Low Income Housing; however the 20% set -aside had gone for debt. He noted the required conditions of new development for low to moderate income housing. Boardmember Buckley questioned the value of the 80+ acres that the , Agency ownedand asked if the land had been appraised. Executive Director Watenpaugh stated that it had not. Boardmember Schiffner noted that the land was at a zero value, because, of the cost to develop the area. Boardmember Buckley questioned raising the land in the Back Basin. Executive Director Watenpaugh noted the requirements of the original Agreement. Boardmember Buckley asked if the agreement with Mr. Shine was still in effect. Legal Counsel Leibold stated that it was not; however the property was contemplated as part of the existing DDA, which would be superceded by the proposed DDA. Boardmember Buckley noted the original Lake Management Agreement which called for recreation in the Back Basin and asked if the new DDA was in conflict. Executive Director Watenpaugh noted the amendments that occurred since the original agreement. Boardmember Schiffner noted that the Levee was not built to improve the land, but rather to cut down the size of the Lake to reduce the evaporation. Boardmember Buckley questioned the purchase arrangements with Civic. Legal Counsel Leibold explained that the Redevelopment Agency Property would be purchased by Civic Partners for $4,000,000, PAGE TEN — STUDY SESSION DECEMBER 9 2002 which would be evidenced by a promissory note and a deed of trust recorded on the property. She further explained that the underlying form of payment would be that as pads were developed in phases of 30 acres to development status, the Developer then would pay the agency, based on residential lots or non - residential acreage, a set amount by a formula found in the DDA. She indicated that at a maximum the developer would be required to render a balloon payment of the remainder of the $4,000,000 and accrued interest. She further indicated that the Developer had agreed to an acceleration in the event that a portion of the Redevelopment Agency property was sold to a non - developer affiliate. Boardmember Schiffner noted that the payment was based upon getting the land at an elevation capable of development and not actually building structures. Boardmember Buckley asked if there was interest on the note. Legal Counsel Leibold stated that it would be at Cal - Trans minus 1 %. Boardmember Buckley cautioned the Council that the project should not be allowed to proceed with undue speed to obtain payment. He questioned if the document was purely financial, however the Economic Performa would consist of 2,603 homes, if that was 'how, the Developer would recover the money outlined in the DDA. He questioned the maximum money that could be obtained through increment. Legal Counsel Leibold stated that the maximum amount of increment the developer could receive would be $50,000 per acre with a total cap of $35,000,000 and reimbursements of certain extraordinary infrastructure costs not to exceed $19,000,000. She further explained that the Master Developer Properties located in the Eastlake Specific Plan would be capped at $42,500 per acre with no other monies available. Boardmember Buckley clarified the amount of money that would be reimbursed. He questioned the maximum Lake level Executive Director Watenpaugh noted that the actual flood elevation set by FEMA was 1262.11' and 1265' was the floor elevation that FEMA would allow building to be done, however the City's Ordinance calls for 1270' and Council could change the elevation to 1265' should they choose to. He explained FEMA would allow building at 1265'; however the City still maintained a building level at 1270. Boardmember Buckley asked if Laing's Master Plans included a school. Mr. Cable stated that some of the Master Plans contained schools and some did not. Boardmember Buckley asked if was easier to sell homes in a Master Plan that contained schools. Mr. Cable indicated that it was agood School PAGE ELEVEN— 'STUDY SESSION - DECEMBER 912002 District was more important than a school in the Master Plan. Chairwoman Brinley asked: if Laing had been in contact with the local, School District. Mr. Cable stated that he had not, however he had been informed that the School District was not interested in building a school in the Back Basin. Boardmember Buckley clarified the existing DDA. Legal Counsel Leibold indicated that the DDA and other documents presented legal rights to the Developer to develop land. Boardmember Buckley questioned the impact of the existing litigation eliminating the 9,000 homes. Legal Counsel Leibold stated that it was possible. Boardmember Buckley stated that the litigation could wipe out the 9,000 homes without entering into any other DDA., Legal Counsel Leibold stated that the existing Specific Plan had an existing land use designation; however the existing litigation found in favor of the Agency could eliminate the existing agreement. Boardmember Buckley clarified the flood storage capacity and its location and addressed tourism management as well as his vision of potential development. He commented that the proposed plan was better than what was previously proposed, however he felt it was a case of whether he wished to get poked in one eye or both eyes and he would rather not be poked in either eye. Boardmember Schiffner commented that he lived in the real world and explained that Council encouraged people to build in the City, however in reality there were people that owned the property and approached Council for approval to develop their property and had the right to do so. He noted that there were a lot of projects that Council would like to see done, however there was no one willing to come forward with the money and build the projects. He explained that Council was trying to improve the situation the City was in, as well as allowing use for the people that owned the property. He agreed with Boardmember Buckley that the proposed Agreement was a thousand times better than the previous Agreement and noted the improvements that would occur from the development as well as potential tax increment. He stated that he felt that the proposed Agreement was the best that the City could accomplish and eliminated most of the bad things that were present in the previous agreement. PAGE TWELVE - STUDY SESSION - DECEMBER 9, 2002' Chairwoman Brinley questioned the defaulting process. Legal Counsel Leibold explained the Agreement with the Developer and Master Developer and outlined the process that would be followed should the Developer default. She indicated that should the Master Planner not choose to cure the related problem, then the City could terminate the Agreement. Chairwoman Brinley noted that the City was moving forward and trying to obtain the best project possible. She thanked Mr. Semingson and Mr. Cable for attending the Study Session and being available for questions. Mr. Semingson thanked Council and staff and stressed how important it was to get public input and expressed his appreciation to the people who spoke. ADJOURNMENT THE STUDY SESSION ADJ76 D AT 5:47 P Respectfully submitted: 7kParedeADepu iC ty Clerk ATES. VICKI KASAD, CMC, CLERK OF THE BOARD